"Irrespective of this surprise easing from the BOJ, the yen remains rather undervalued, especially after this knee-jerk fall past 120. It remains to be seen if this yen move is sustainable." - Credit Suisse (based on Reuters)
Pair's Outlook Because of BoJ's unexpected announcement USD/JPY covered the distance between the yesterday's close and 120.50 yen a lot sooner than estimated. However, this does not change the overall picture that the currency pair is still facing a strong supply area, consisting of the 55- and 100-day SMAs. Additional insurance against continuation of Greenback's further appreciation is provided by the 200-day SMA and monthly PP at 121.45/30, meaning there is a high probability of a sell-off from 120.50.
Traders' Sentiment Despite a precipitous decline of the Yen the market sentiment proved to be resilient and stable. The shorts remain in a majority with 74%, while 57% of pending orders are to buy the Dollar.